2024 (7) TMI 1454 - AT - Central Excise

Valuation - incusion of amount of subsidy received by the appellant under the Rajasthan Investment Promotion Scheme, 2010 from the State Government in the assessable value of the goods cleared during the period in dispute - Section 4(3)(d) of Central Excise Act - period during 1.4.2016 to 31.03.2017 - HELD THAT - Reliance placed on the latest decision in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR 2023 (3) TMI 1120 - CESTAT NEW DELHI , where on reference the issue was once again settled that in the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under Section 4 of the Excise Act. The principle of law that emerges from series of decisions is that the VAT amount paid by the assessee using VAT 37B challans would be construed as actual payment of VAT and thus will not be included in the transaction value in terms of Section 4(3)(d) of the Act - the impugned order holding otherwise needs to be set aside. In the present case also, the entire amount of sale tax collected from the customer is paid and not retained by the appellant. The other submissions made on the point of extended period of limitation or the liability towards interest and penalty, not considered, which otherwise do not survive. The impugned order deserves to be set aside - Appeal allowed.

Summary

Issues:
Whether the subsidy received under the Rajasthan Investment Promotion Scheme is includible in the assessable value for the payment of excise duty.

Analysis:
The appellant, engaged in manufacturing M.S. Billets and CC Billets under the Rajasthan Investment Promotion Scheme, received subsidies in the form of VAT 37B Forms. The Revenue issued a show cause notice demanding duty on the subsidy amount, which was affirmed by the Adjudicating Authority and the impugned order, leading to the appeal before the Tribunal.

The key issue before the Tribunal was whether the subsidy received by the appellant should be included in the assessable value of goods cleared, as per Section 4(3)(d) of the Act. The appellant's counsel cited various Tribunal decisions, including a recent one, to support their argument. The Authorised Representative agreed that the issue favored the assessee.

The Tribunal noted that the Rajasthan government issued the RIPS to promote investment and generate employment. Previous decisions had consistently ruled in favor of the assessee, establishing that the subsidy did not affect the selling price and should not be included in the transaction value for excise duty levy.

Citing the latest decision in Harit Polytech, the Tribunal reiterated that the subsidy did not reduce the selling price or constitute additional consideration. The subsidy amount, used to pay VAT, was considered actual payment and not part of the transaction value under Section 4(3)(d) of the Act.

Based on the settled law and series of decisions, the Tribunal concluded that the impugned order was incorrect, and the appeal was allowed. The Tribunal set aside the impugned order, emphasizing that the VAT amount paid using VAT 37B challans should not be included in the transaction value for excise duty purposes.

In light of the clear legal precedent, the Tribunal did not address other submissions regarding the limitation period or liability towards interest and penalty, as they were deemed irrelevant. The appeal was allowed, and the impugned order was set aside in favor of the appellant.